A firm that stretches its payables gains an extra 1 month before it needs to pay...
A firm that stretches its payables gains an extra 1 month before it needs to pay for its purchases of raw materials but it loses a 2% discount for prompt payment. This is like borrowing at an effective annual interest rate of:
Multiple Choice
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19.40%
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27.43%
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24.00%
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26.53%
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A firm that stretches its payables gains an extra 1 month before
it needs to pay...
Exercises #11 1. Xtra Corporation needs $50,000 for three months to finance its working capital. The company has arranged a short-term loan with a bank. The bank charges 8% annual interest rate wi...
Exercises #11 1. Xtra Corporation needs $50,000 for three months to finance its working capital. The company has arranged a short-term loan with a bank. The bank charges 8% annual interest rate with interest paid in advance. The bank also requires 5% of the borrowed amount as a compensating balance. Assume Xtra does not have money to serve as a compensating balance and pay interest upfront 1.1 How much Xtra have to borrow? 1.2 Find effective cost of bank loan...
A firm purchases $4,562,500 in goods over a 1-year period from its sole supplier. The supplier...
A firm purchases $4,562,500 in goods over a 1-year period from its sole supplier. The supplier offers trade credit under the following terms: 2/15, net 50 days. Davis finally chooses to pay on time (pay in the 50th day) but not to take the discount. We assume 365 days per year. What is the average level of the company’s free trade credit? $187,500 Based on the information from Question 31, what is the effective annual cost of the firm’s costly...
Active Life Inc., a sports equipment retailer, needs to prepare a cash budget for the first...
Active Life Inc., a sports equipment retailer, needs to prepare a cash budget for the first quarter of 2018. The financial staff at Active Life has forecasted the following sales figures: January February March April May $100,000 $150,000 $300,000 $250,000 $150,000 Actual sales in October, November, and December 2017 were $125,000, $146,000, and $125,000, respectively. Cash sales are 40% of the total, and the rest are on credit. Under the current credit policy the firm expects to collect 60% of...
QUESTION 3: Carmin Marbles Works (CMW) needs to expand its facilities. To do so, the company...
QUESTION 3: Carmin Marbles Works (CMW) needs to expand its facilities. To do so, the company must acquire a polishing machine costing $100,000. The machine can be leased or purchased. The firm is in the 30% tax bracket and its before-tax cost of borrowing is 11% per annum. The terms of the lease and purchase plans are as follows: Lease: The leasing arrangement requires beginning-of-year payments of $30,000 over 4 years. Under this option, maintenance and insurance costs will be...
(Preparation of a cash budget) Lewis Printing has projected its sales for the first 8 months...
(Preparation of a cash budget) Lewis Printing has projected its sales for the first 8 months of 2016 as follows: January $140,000 April $300,000 July $200,000 February $100,000 May $255,000 August $200,000 March $170,000 June $180,000 Lewis collects 30 percent of its sales in the month of thesale, 40 percent in the month following the sale, and the remaining 30 percent 2 months following the sale. During November and December of 2015, Lewis's sales were...
Preparation of a Cash Budget) Lewis Printing has projected its sales for the first 8 $200,000 January $100,000 april 300,000 july 180,000 February120,000 May 275,000 August June 200,000 March 1...
Preparation of a Cash Budget) Lewis Printing has projected its sales for the first 8 $200,000 January $100,000 april 300,000 july 180,000 February120,000 May 275,000 August June 200,000 March 150,000 Lewis collects 20 percent of its sales in the month of the sale, 50 percent in the month following the sale, and the remaining 30 percent 2 months following the sale. Durin November and $175,0 mber of 2017, Lewis's sales were $220,000 and ive res raw materials 2 months in...
The rest of the details: Gadgets, Inc. is incorporated and will begin operations on January 1, 2019. Its primary...
The rest of the details:
Gadgets, Inc. is incorporated and will begin operations on January
1, 2019. Its primary business is the manufacture and sale of
gadgets. Because cash resources are limited, the company
anticipates the need to have access to capital during the first
year of operations and seeks to establish a line of credit with a
local bank. The bank requires a complete operating and cash budget
and pro-forma financial statements for 2019 as part of the loan...
Please provide a: 1) Direct materials budget, including a schedule of expected cash disbursements for materials....
Please provide a:
1) Direct materials budget, including a schedule of expected
cash disbursements for materials.
2) Direct labor budget.
Kimmel Gnomes, located in South Dakota, may be the only other manufacturer of high quality clay garden gnomes that are hand finished. Kimmel Gnomes are stoneware, rather than terracotta. Stoneware uses higher-quality clay than terracotta and the gnomes are fired at higher temperature, yielding a stronger, more durable gnome. The gnomes are fired inside and out and are colored with...
Please provide a 1) Budgeted income statement for the year ending June 30, 2019. 2) Budgeted...
Please provide a
1) Budgeted income statement for the year ending June 30,
2019.
2) Budgeted balance sheet for June 30, 2019.
We only need annual totals for the budgeted financial
statements
Kimmel Gnomes, located in South Dakota, may be the only other manufacturer of high quality clay garden gnomes that are hand finished. Kimmel Gnomes are stoneware, rather than terracotta. Stoneware uses higher-quality clay than terracotta and the gnomes are fired at higher temperature, yielding a stronger, more durable...
You have just been hired as a new manager at Bracelets Unlimited. In the past the company has done very little i...
You have just been hired as a new manager at Bracelets Unlimited. In the past the company has done very little in the way of budgeting. Since you are well rained in budgeting you have decided to prepare a comprehensive master budget for the upcoming year. You have worked with accounting and other areas of the company to compile the following information. The company sell its bracelets for $15 each. Actual sales for the last three months and budgeted sales...
Exercises #11 1. Xtra Corporation needs $50,000 for three months to finance its working capital. The company has arranged a short-term loan with a bank. The bank charges 8% annual interest rate with interest paid in advance. The bank also requires 5% of the borrowed amount as a compensating balance. Assume Xtra does not have money to serve as a compensating balance and pay interest upfront 1.1 How much Xtra have to borrow? 1.2 Find effective cost of bank loan...
Active Life Inc., a sports equipment retailer, needs to prepare a cash budget for the first quarter of 2018. The financial staff at Active Life has forecasted the following sales figures: January February March April May $100,000 $150,000 $300,000 $250,000 $150,000 Actual sales in October, November, and December 2017 were $125,000, $146,000, and $125,000, respectively. Cash sales are 40% of the total, and the rest are on credit. Under the current credit policy the firm expects to collect 60% of...
QUESTION 3: Carmin Marbles Works (CMW) needs to expand its facilities. To do so, the company must acquire a polishing machine costing $100,000. The machine can be leased or purchased. The firm is in the 30% tax bracket and its before-tax cost of borrowing is 11% per annum. The terms of the lease and purchase plans are as follows: Lease: The leasing arrangement requires beginning-of-year payments of $30,000 over 4 years. Under this option, maintenance and insurance costs will be...
Preparation of a Cash Budget) Lewis Printing has projected its sales for the first 8 $200,000 January $100,000 april 300,000 july 180,000 February120,000 May 275,000 August June 200,000 March 150,000 Lewis collects 20 percent of its sales in the month of the sale, 50 percent in the month following the sale, and the remaining 30 percent 2 months following the sale. Durin November and $175,0 mber of 2017, Lewis's sales were $220,000 and ive res raw materials 2 months in...
The rest of the details:
Gadgets, Inc. is incorporated and will begin operations on January
1, 2019. Its primary business is the manufacture and sale of
gadgets. Because cash resources are limited, the company
anticipates the need to have access to capital during the first
year of operations and seeks to establish a line of credit with a
local bank. The bank requires a complete operating and cash budget
and pro-forma financial statements for 2019 as part of the loan...
Please provide a:
1) Direct materials budget, including a schedule of expected
cash disbursements for materials.
2) Direct labor budget.
Kimmel Gnomes, located in South Dakota, may be the only other manufacturer of high quality clay garden gnomes that are hand finished. Kimmel Gnomes are stoneware, rather than terracotta. Stoneware uses higher-quality clay than terracotta and the gnomes are fired at higher temperature, yielding a stronger, more durable gnome. The gnomes are fired inside and out and are colored with...
Please provide a
1) Budgeted income statement for the year ending June 30,
2019.
2) Budgeted balance sheet for June 30, 2019.
We only need annual totals for the budgeted financial
statements
Kimmel Gnomes, located in South Dakota, may be the only other manufacturer of high quality clay garden gnomes that are hand finished. Kimmel Gnomes are stoneware, rather than terracotta. Stoneware uses higher-quality clay than terracotta and the gnomes are fired at higher temperature, yielding a stronger, more durable...
You have just been hired as a new manager at Bracelets Unlimited. In the past the company has done very little in the way of budgeting. Since you are well rained in budgeting you have decided to prepare a comprehensive master budget for the upcoming year. You have worked with accounting and other areas of the company to compile the following information. The company sell its bracelets for $15 each. Actual sales for the last three months and budgeted sales...
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